Today in Apple history: $200 iPhone discount fuels fan backlash

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First gen iPhone
The iPhone won plaudits. Its price reduction? Not so much.
Photo: Traci Dauphin/Cult of Mac

September 5: Today in Apple history: $200 iPhone price cut incurs fan backlash September 5, 2007: Just months after the first iPhone went on sale, Apple ditches its bottom-tier 4GB model and cuts the price of the 8GB version by $200.

A rare misstep (considering Apple’s usual mastery of the press), this tone-deaf PR move backfires immediately. Early adopters rage about shelling out premium prices for their first-generation iPhones. Fortunately, Apple makes good.

Apple’s decision to eliminate the lower-tier iPhone and cut the price for the 8GB version to $399 from $599, seemed great to casual fans. (Apple slashed the price on remaining stock of the 4GB model to just $299.) Suddenly, a phone that many people criticized as unfeasibly expensive became far more affordable.

iPhone price cut angers early adopters

The problem came from Apple’s early adopters. These Apple fans, many of whom supported the underdog company during its climb back to the top, now felt cheated. In the days after the iPhone price cut, Apple websites brimmed with fanboys and fangirls calling the move Cupertino’s biggest PR disaster in years.

Another group raised alarms as well: analysts. They thought the move showed Apple was struggling to achieve volume sales. This latter point was, thankfully, countered five days later when Apple announced that it had sold its 1 millionth iPhone.

Apple makes nice with original iPhone buyers

Nonetheless, Apple sprang into action to make good with irritated customers. Steve Jobs reported receiving “hundreds” of angry emails on the subject. To deal with the backlash, he decided Apple would offer a $100 credit to anyone who paid the original full price for an iPhone. That still left customers $100 out of pocket, but the swift response earned Apple loads of goodwill.

In the “this is why we can’t have nice things” category, the backlash Apple faced might explain why the company seems wary of offering discounts in the years since. (Incidentally, those who did buy a first-generation iPhone can at least not feel too upset due to the considerable prices the first-gen iPhone now commands online.)

Did you shell out the full price for an early iPhone? Which model did you buy? Leave your comments below.